Complete the statement of cash flows for all three sections on the following page for the year ended December 31, 2023 using the indirect method.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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The data below are selected account balances taken from the financial statements of the Goat Corporation:
Income Statement: 2023
Net income 98,500
Patent Amortization 7,000
Gain on sale of investments 11,000
Cash 140,350
Inventories 165,200
Prepaid Expenses: 6,240
Accounts Payable: 43,500
Accrued Expenses Payable: 14,000
Income Taxes Payable: 7,900
Common Stock 450,000
Paid in Capital in Excess of Par-Common Stock 66,250
Dividends Payable: 14,000
Investments: 35,700
Balance Sheet: 2022. ..................Increase(decrease)
Cash 95,900
Accounts Receivable 102,300
Inventories 157,900
Prepaid Expenses 5,860
Accounts Payable 46,700
Accrued Expenses Payable: 12,500
Income Taxes Payable 8,400
Common Stock 375,000
Paid in Capital in Excess of Par-Common Stock 41,250
Dividends Payable 10,000
Additional Information for 2023:
Land costing $15,000 was sold for $15,000
Mortgage note was issued for $40,000
A building costing $115,000 was constructed
Cash dividends declared were $74,670
Investments: 84,700
Balance sheet 2023
Complete the statement of
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